Fighting Cheats With A 1040

August 10, 1985|By Yellow

Call it downright nasty but the plan to use the IRS to get cheats to pay their defaulted student loans is a good and effective way to clamp down.

The idea is simple: People who aren't paying back their loans won't get tax refunds for as long as it takes to pay the amount owed. There's a total of $4.1 billion in defaulted loans. And the cheats aren't just cheating the government. They are cheating future college students because many loan funds are revolving and rely on paybacks to give more loans.

This isn't the first time that IRS will withhold refunds to crack down on deadbeats. In 1982 parents who weren't paying child support got tagged. And the tactic is working. Last year the IRS withheld 423,000 refunds totaling $211 million. That money went back to families who hadn't been getting child support. So far this year, tax folks have stopped 456,000 refunds totaling $221 million.

The way the student loan crackdown will work is more than fair. People who haven't paid their loans for several years will be notified that the IRS is going to take action against them. But even then, they will have 60 days to set up a payment plan with the Education Department. If they still refuse, the IRS will withhold their tax refunds.

Education officials were smart to get the IRS involved, but they share some blame for getting the loan system into such a mess. For years, officials weren't aggressive enough with people who didn't repay loans. Borrowers ignored loans and nothing happened to them.

It's encouraging to see that the crackdown is happening on another front too. Federal prosecutors' offices nationwide are filing lawsuits against people who aren't paying back loans. The North Florida office, for example, has almost 150 judgments against defaulters who are beginning to pay back more than $500,000.

These policies are tough. But they seem to be the only way to send a message that people who get government loans when they are in need must return the favor.